ChinaCache Reports Adjusted Fourth Quarter and Full Year 2016 Results

Announces Impairment to Property and Equipment and Intangible Assets

BEIJING, Nov. 14, 2017 (GLOBE NEWSWIRE) -- ChinaCache International Holdings Ltd. ("ChinaCache" or the "Company") (Nasdaq:CCIH), a leading total solutions provider of Internet content and application delivery services in China, today reported adjusted audited financial results for the fourth quarter and full year 2016, which included a non-cash impairment charge of RMB399.1 million, resulting in an retroactive increase to operating expenses for both the fourth quarter and full year 2016.

Due to the downturn in the Company’s operating results, ChinaCache has impaired the net value of all its property and equipment and intangible assets as of December 31, 2016 based on the excess of the carrying amount of the asset group over its fair value. The Company determined the fair value of the asset group using the income approach based on the discounted expected cash flows associated with the asset group. The discounted cash flow for the asset group was based on three-year projections, which is consistent with the remained useful lives of the principal assets. Cash flow projections were based on past experience, actual results of operations and management best estimates about future developments, as well as certain market assumptions.

ChinaCache currently expects to generate total net revenues in the range of RMB0.84 billion to RMB0.87 billion for the full year of 2017, representing year-over-year decrease of approximately 20% to 17%.

This forecast reflects ChinaCache's current view, which is subject to change.

The following presents the Company's unaudited financial results for the fourth quarter 2016 and full year 2016 after giving effect to the aforementioned adjustment(s).

Condensed Consolidated Balance Sheets

(amounts in thousands)

As of Dec 31

As of Dec 31

As of Dec 31

2015

2016

2016

RMB

RMB

US$

(Audited)

(Unaudited)

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

606,796

134,924

19,433

Accounts receivable, net

243,431

190,587

27,450

Prepaid expenses and other current assets

31,560

56,976

8,206

Short term investments

26,169

-

-

Deferred tax assets

17,923

-

-

Amount due from a subsidiary held for sale

435

53,169

7,658

Assets held for sale

1,060,543

1,270,483

182,988

Total current assets

1,986,857

1,706,139

245,735

Non-current assets

Property and equipment, net

499,946

-

-

Intangible assets, net

10,898

-

-

Long term investments

50,157

34,159

4,920

Deferred tax assets

11,368

-

-

Long term deposits and other non-current assets

59,390

36,525

5,261

Total non-current assets

631,759

70,684

10,181

Total Assets

2,618,616

1,776,823

255,916

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Short-term loan

-

29,311

4,222

Accounts payable

205,593

301,569

43,435

Accrued employee benefits

44,690

46,233

6,659

Accrued expenses and other payables

76,409

52,697

7,590

Income tax payable

13,513

13,924

2,005

Liabilities for uncertain tax positions

11,337

10,020

1,443

Amounts due to related parties

18

18

3

Current portion of long term loan

7,180

3,840

553

Current portion of capital lease obligations

70,615

72,851

10,493

Deferred government grant

16,360

13,000

1,872

Amount due to a subsidiary held for sale

319,536

18,063

2,602

Liabilities held for sale

1,014,449

1,302,658

187,622

Total current liabilities

1,779,700

1,864,184

268,499

Non-current liabilities

Long-term loan

4,340

-

-

Non-current portion of capital lease obligations

104,450

43,951

6,330

Deferred government grant

8,439

11,208

1,614

Total non-current liabilities

117,229

55,159

7,944

Total Liabilities

1,896,929

1,919,343

276,443

Total Shareholders' equity

721,687

(142,520

)

(20,527

)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

2,618,616

1,776,823

255,916

Condensed Consolidated Statements of Comprehensive Income

(amounts in thousands, except for number of shares, per share and per ADS data)

For the Three Months Ended

For the Twelve Months Ended

Dec 31, 2015

Sep 30, 2016

Dec 31, 2016

Dec 31, 2016

Dec 31, 2015

Dec 31, 2016

Dec 31, 2016

RMB

RMB

RMB

US$

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Unaudited)

(Unaudited)

Net revenues

311,447

261,643

263,312

37,926

1,353,627

1,054,235

151,842

Cost of revenues

(267,339

)

(255,133

)

(275,927

)

(39,742

)

(1,041,412

)

(1,077,810

)

(155,237

)

Gross profit (loss)

44,108

6,510

(12,615

)

(1,816

)

312,215

(23,575

)

(3,395

)

Other operating income (loss)

13,911

3,260

(28,895

)

(4,162

)

13,911

(19,044

)

(2,743

)

Sales & marketing expenses

(30,145

)

(23,009

)

(22,467

)

(3,236

)

(115,621

)

(93,603

)

(13,482

)

General & administrative expenses

(61,062

)

(62,202

)

(50,264

)

(7,240

)

(198,626

)

(265,017

)

(38,170

)

Research & development expenses

(25,530

)

(24,037

)

(25,102

)

(3,615

)

(103,110

)

(104,018

)

(14,982

)

Transaction tax on assets transfer

(5,394

)

-

-

-

(27,733

)

-

-

Impairment of long lived assets

-

-

(399,094

)

(57,482

)

-

(399,094

)

(57,482

)

Impairment of long term investments

-

-

(18,240

)

(2,627

)

-

(18,240

)

(2,627

)

Operating loss

(64,112

)

(99,478

)

(556,677

)

(80,178

)

(118,964

)

(922,591

)

(132,881

)

Interest income

1,940

1,627

261

38

4,618

4,669

672

Interest expense

(2,473

)

(2,932

)

(2,091

)

(301

)

(13,158

)

(11,647

)

(1,678

)

Other income (expense)

141

5,171

(263

)

(38

)

2,991

5,336

769

Foreign exchange gain, net

4,845

915

8,015

1,154

13,164

14,209

2,047

Loss before income taxes

(59,659

)

(94,697

)

(550,755

)

(79,325

)

(111,349

)

(910,024

)

(131,071

)

Income tax benefit (expense)

22,861

384

(21,805

)

(3,141

)

22,614

(4,229

)

(609

)

Net loss

(36,798

)

(94,313

)

(572,560

)

(82,466

)

(88,735

)

(914,253

)

(131,680

)

Net loss attributable to the noncontrolling interest

(44

)

(152

)

(463

)

(67

)

(44

)

(776

)

(112

)

Net loss attributable to the Company's shareholders

(36,754

)

(94,161

)

(572,097

)

(82,399

)

(88,691

)

(913,477

)

(131,568

)

Foreign currency translation

249

(196

)

(286

)

(41

)

264

(293

)

(42

)

Unrealized holding gain on available-for-sale investments

1,106

36

-

-

1,853

659

95

Reclassification adjustments for gains included in net income

-

(3,741

)

-

-

-

(3,552

)

(512

)

Total other comprehensive income (loss), net of tax

1,355

(3,901

)

(286

)

(41

)

2,117

(3,186

)

(459

)

Comprehensive loss

(35,443

)

(98,214

)

(572,846

)

(82,507

)

(86,618

)

(917,439

)

(132,139

)

Comprehensive loss attributable to the noncontrolling interest

(44

)

(152

)

(463

)

(67

)

(44

)

(776

)

(112

)

Comprehensive loss attributable to the Company's shareholders

(35,399

)

(98,062

)

(572,383

)

(82,440

)

(86,574

)

(916,663

)

(132,027

)

Loss per ordinary share:

Basic

(0.09

)

(0.23

)

(1.36

)

(0.20

)

(0.22

)

(2.24

)

(0.32

)

Diluted

(0.09

)

(0.23

)

(1.36

)

(0.20

)

(0.22

)

(2.24

)

(0.32

)

Loss per ADS*:

Basic

(1.45

)

(3.68

)

(21.76

)

(3.20

)

(3.49

)

(35.84

)

(5.12

)

Diluted

(1.45

)

(3.68

)

(21.76

)

(3.20

)

(3.49

)

(35.84

)

(5.12

)

Weighted average number of ordinary shares used in earnings per share computation:

Non-GAAP operating loss — defined as GAAP operating loss before share-based compensation expense, transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments

Operating loss

(64,112

)

(99,478

)

(556,677

)

(80,178

)

(118,964

)

(922,591

)

(132,881

)

Share-based compensation

18,259

8,601

2,685

387

48,606

85,025

12,246

Transaction tax on assets transfer

5,394

-

-

-

27,733

-

-

Impairment of long lived assets

-

-

399,094

57,482

-

399,094

57,482

Impairment of long term investments

-

-

18,240

2,627

-

18,240

2,627

Non-GAAP operating loss

(40,459

)

(90,877

)

(136,658

)

(19,682

)

(42,625

)

(420,232

)

(60,526

)

Margin%

(13.0

%)

(34.7

%)

(51.9

%)

(51.9

%)

(3.1

%)

(39.9

%)

(39.9

%)

About ChinaCache International Holdings Ltd.

ChinaCache International Holdings Ltd. (Nasdaq:CCIH) is a leading total solutions provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache's network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China's complex Internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit ir.chinacache.com.

Safe Harbor StatementThis announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the revenue guidance and quotations from management in this announcement, as well as ChinaCache's strategic and operational plans, contain forward-looking statements. ChinaCache may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ChinaCache undertakes no duty to update such information, except as required under applicable law.

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